Non-Profit Fraud: The Poor Pay
Segment # 195
From the data, it is pretty obvious that nonprofit organizations have a significant problem with fraud that hurts the poor. Maybe you are thinking ‘who cares?’. You might care soon because you will be paying for the cleanup with the nonprofits and NGOs (Non-Government Organizations) that politicians have backed for all sorts of reasons that ultimately feathered their own nests. So below is a glimpse of the nonprofits. Tomorrow we talk about the NGO’s.
My interest in looking at nonprofits was captured by the current case in Minneapolis against Feeding Our Future. FOF not only was caught stealing $250 million, they also unsuccessfully tried to bribe a juror with a $120,000 to rig their trial. Pretty brazen really which seems to beg the question is this just the beginning with 10 to 15 million illegals roaming free in the U.S. There are always unintended consequences to every bad decision. We are and will pay for this for decades.
Fraud is a significant issue for nonprofit organizations, including those focused on helping the poor. While exact figures are difficult to determine, several studies provide insights into the scale and impact of fraud in nonprofits.
According to the Association of Certified Fraud Examiners (ACFE) 2020 Report to the Nations, nonprofits represented 9% of fraud cases studied, with a median loss of $75,000 per case. The average loss was even higher at $639,000 per case.
An estimated $40-50 billion per year is lost to fraud in nonprofits overall, according to a New York Times report cited by CB Wealth Advisory.
The typical organization loses an estimated 5% of its annual revenue to fraud, as reported by the ACFE. For nonprofits specifically, the median loss was $100,000 in a previous study.
The most common types of fraud schemes affecting nonprofits include:
Corruption (41% of cases)
Billing fraud (30%)
Expense reimbursement fraud (23%)
Cash theft (17%)
Non-cash asset misappropriation (16%)
It's important to note that fraud in nonprofits can be particularly damaging, not just financially but also reputationally. Many nonprofits depend on donor support, and a damaged reputation can have devastating consequences. Factors contributing to fraud vulnerability in nonprofits include:
Lack of internal controls (35% of cases)
Lack of management review (19%)
Override of existing internal controls (14%)
Prevalence of Fraud in Nonprofits: Nonprofits represent 9% of fraud cases, with a median loss of $75,000 per case and an average loss of $639,000. Fraud schemes in nonprofits include billing fraud, embezzlement, expense fraud, and misappropriation of funds.
Common Fraud Schemes: The most common types of fraud in nonprofits are corruption, billing fraud, and expense reimbursement fraud. These schemes are not specific to any political affiliation.
Contributing Factors: Factors contributing to fraud vulnerability in nonprofits include lack of internal controls, lack of management review, and override of existing controls. These issues are organizational rather than ideological.
Impact and Detection: Fraud can have significant financial and reputational impacts on nonprofits. Detection methods include tips, internal audits, and management reviews.
General Findings: Fraud in nonprofits is a widespread issue affecting various sectors, including arts, entertainment, and community organizations, without specific reference to political leanings.
In conclusion, the available data does not support the a
To combat fraud, nonprofits can implement measures such as:
Encouraging employees to report suspicious activity
Implementing strong internal controls and management review processes
Conducting regular audits
Providing fraud awareness training
Establishing clear anti-fraud policies
While these statistics are concerning, it's crucial to remember that many nonprofits operate ethically and effectively. Donors and board members should exercise due diligence and scrutiny to ensure their contributions are used appropriately to help those in need.
Feeding Our Future
Feeding Our Future was a Minnesota nonprofit organization that became the center of a significant fraud scheme involving federal child nutrition programs. Here are the key points about Feeding Our Future:
Purpose: It was originally established to participate in federal child nutrition programs, specifically the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP)
Fraud scheme: According to the federal government, Feeding Our Future was at the center of a major fraud scheme involving these nutrition programs
Scale of operations: In the 2020 CACFP program year, Feeding Our Future served approximately 2.6 million meals and snacks at 105 sites, managing about $5.3 million in reimbursements. From June to September 2020, it served 2.4 million SFSP meals and snacks at 33 sites, worth $7.2 million in reimbursements
Rapid growth: The organization's operations expanded significantly. For the 2021 CACFP program year, it estimated serving nearly 7.2 million meals and snacks at 138 sites, worth $15.6 million in reimbursements
Oversight issues: The Minnesota Department of Education (MDE), responsible for overseeing these programs, faced challenges in effectively monitoring Feeding Our Future. The organization often failed to provide requested information about its finances and internal controls
Legal actions: Feeding Our Future sued MDE in November 2020, alleging delays in approving its site applications. It also appealed MDE's denials of its site applications to the Minnesota Court of Appeals in 2021
Termination: The fraud scheme was uncovered in early 2022, leading to the termination of Feeding Our Future's participation in the federal nutrition programs.
This case highlights significant issues in the oversight and management of federal nutrition programs and has led to increased scrutiny of how such programs are administered and monitored.
Feeding Our Future was a Minnesota nonprofit organization that became the center of a significant fraud scheme involving federal child nutrition programs. Here are the key points about Feeding Our Future:
Purpose: It was originally established to participate in federal child nutrition programs, specifically the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP)
Oversight issues: The Minnesota Department of Education (MDE), responsible for overseeing these programs, faced challenges in effectively monitoring Feeding Our Future. The organization often failed to provide requested information about its finances and internal controls
Legal actions: Feeding Our Future sued MDE in November 2020, alleging delays in approving its site applications. It also appealed MDE's denials of its site applications to the Minnesota Court of Appeals in 2021.
Feeding our Future pandemic fraud trial sends 2nd juror home
FOX 9 Minneapolis-St. Paul Two jurors have been dismissed in the last two days during deliberations over one of the largest pandemic fraud schemes in the nation. FOX 9’s Rob Olson has the details. Subscribe to FOX 9 Minneapolis-St. Paul / @fox9 …
Feeding our Future pandemic fraud trial sends 2nd juror home - YouTube
Based on the search results provided, there is no explicit information about the citizenship status of those indicted in the Feeding Our Future fraud case. The indictments and charges appear to focus on the alleged fraudulent activities rather than the citizenship of the defendants. Here are the key points regarding the indictments:
A total of 60 people have been charged with stealing more than $250 million in what prosecutors say was orchestrated by a Minnesota nonprofit called Feeding Our Future
The charges include conspiracy, wire fraud, money laundering, and bribery. The fraud scheme involved falsely claiming to have served millions of meals to needy children and submitting fraudulent claims for reimbursement
Many of the defendants had names that appear to be of Somali or East African origin, but this does not necessarily indicate their citizenship status. Some of the defendants held positions in local government or businesses, such as Abdi Nur Salah, who was a former senior policy aide to Minneapolis mayor Jacob Frey
The indictments list various businesses and nonprofits involved in the scheme, including restaurants, daycare centers, and community organizations.
Without specific information about the citizenship status of those indicted, it's not possible to definitively state whether any of the defendants were non-citizens. The focus of the indictments appears to be on the alleged criminal activities rather than the immigration or citizenship status of those involved.